Oil prices fall below $106 per barrel
Oil prices hovered below $106 a barrel Friday in Asia as political upheaval in the Middle East and signs of strong global demand keep crude near two-year highs.
Benchmark crude for May delivery was down 8 cents to $105.52 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 15 cents to settle at $105.60 on Thursday.
In London, Brent crude was up 12 cents at $115.84 a barrel on the ICE futures exchange.
Crude prices have jumped 25 percent since protests against Libyan leader Moammar Gadhafi that began in mid-February escalated into a rebellion and shut down most of the OPEC nation’s 1.6 million barrels per day of crude output. Fighter jets from a coalition of nations have pounded Gadhafi’s forces this week but rebels have so far been unable to mount an offensive to overthrow the regime.
Investors are also closely watching escalating protests in Syria and a power struggle in Yemen, the latest unrest in a wave of uprisings this year that unseated leaders from power in Tunisia and Egypt and sparked violent demonstrations throughout North Africa and the Middle East.
Recent signs of strong crude demand in the U.S. and China have helped push prices higher. Chinese oil demand rose 10 percent in February from a year earlier and U.S. gasoline inventories plunged last week, suggesting consumers haven’t cut back driving despite higher fuel costs.
“Geopolitical unrest in the Middle East amid a phenomenally strong demand backdrop keeps prices well supported,” Barclays Capital said in a report.
The U.S. government said Thursday that fewer people applied for unemployment benefits last week, evidence that layoffs are slowing. The average number of unemployment filings over the last four weeks has dropped to its lowest level since July 2008.
A rebound in U.S. stock markets and a recent slump of the U.S. dollar — which makes crude cheaper for investors holding other currencies — have also contributed to the highest oil prices since September, 2008.
Still, some analysts say the recent run-up in prices could falter if the crises in the Arab world were quickly resolved.
“Oil prices are extremely overbought here and are susceptible to a sell-off at any point,” Cameron Hanover said in a report. “If we see the mood change, we could see a sharp and striking sell-off.”
In other Nymex trading for April contracts, heating oil rose 1.1 cents at $3.07 a gallon and gasoline gained 1.7 cents to $3.06 a gallon. Natural gas added 0.1 cent to $4.25 per 1,000 cubic feet.
Source: AP